Marketing Management

Educational subject: E381054 - Management and Economics of the Enterprise

Management and Economics of the Enterprise Department
Mechanical Engineering Faculty, CTU in Prague

Assignment topic: Brand Strategy

2020, Summer Term Gabriel Bruno Parreira

Introduction:

Brands are one of the most important aspects of a company’s marketing strategy. When

deciding on its brand strategy and brand building there are many factors that a company should

take into consideration when making the choice of how to advertise new products that it

produces. This essay will seek to explain some of the considerations that a company has to make

and also explain how the brand strategy and brand building works. I will also try to explain the

advantages of having well-built and managed brand as well as the considerations that have to be

made when managing and building a brand.

Let’s start with some of the more traditional brand strategy approaches. Traditionally,

when a company is deciding how to brand a new product, they have 3 main choices of how to go

about it: Develop new brand elements for the specific product; use old brand elements, or use a

combination of old and new brand elements. Now, what are the advantages and disadvantages of

each of these cases? In the case of completely new brand elements one might say that the

advantages are in the fact that some companies might desire to have 2 separate markets for their

products. For example: a company might have a line of lower quality, price accessible products

under one brand that is readily available for the wider public, while reserving another brand for

their higher end products that might be restricted to a more specialized market. By having this

complete separation, when the low end seems to be of inferior quality or when any of the

products of the low end brand fails, the higher end product line is protected from the bad

reputation, and the failure of low quality products are not associated with the high end line of

products, thus the high end brand is not affected by the bad image that the low end products

might have acquired. However, there are some disadvantages in this approach as well, the main

one being the fact that a company with multiple brands have to spend more in building an array
of different brand reputations, and this takes us to the second approach of product branding:

using old brand elements.

Despite using a single brand element for all the products might have some disadvantages,

like the taint of the whole brand by the failure of one specific line of products, there is also an

important advantage on keeping a single brand identity for all old and new products. If a

company is already quite big and well known, new products can readily benefit from being

associated with the brand of this specific company. This reduces the costs that company would

have if it had to advertise the new product under a different brand name. Since the brand is

already well stablished and the brand name already widely known, no other costs with publicity

have to be undertaken by the company, which greatly saves time and money. Not to mention

there is no need to invest time and money in designing a new brand in the first place.

The last and somewhat more complex of these 3 brand strategies is the sub-brand name.

With the sub-brand technique, a company can in a way get the best of both worlds from the 2

previous strategies. The general brand name serves as a way to legitimize the new product being

released by its association with a larger and more well-known brand name, while the sub-brand

name helps to individualize the new product or line of products. Thus, a company can at the

same time separate a specific product line from the major brand but keep its association with the

major brand and use the major name as form of publicity for the new line. As I mentioned before

the sub-brand strategy is a bit more complex than the previous 2 and within this strategy, we

have to decide between 2 sub strategies commonly known as: House of Brands or Branded

House.

The house of brands strategies can be useful when a company has a somewhat related but

very diverse line of products. In such a case it might make sense to have each product that is
related to a specific industry be under the same brand name, while products related to a separate

industry will be associated under a different brand name. However, all these brands are unified

under a single umbrella brand that can be used to advertise the company to shareholders and

other influential target audiences, such as government officials. A good example of that is the

Alphabet conglomerate created by Google. The Major Alphabet group name is used for investors

and other important audiences, while each company retains a separate brand name and identity

like Google.

Now the Branded house is something that is very common to see in the automotive

industry. We have a major car manufacturer, such as Toyota, that has a number of different car

models under their name. Each of these car models are individualized, but at the same time they

are all related to the bigger Toyota family. In this strategy of brand naming it is useful to have

some flagship product that helps to pull all the other products to the public eye. A flagship

product is a product for which a specific brand is famous and it has the advantage of increase

immediate sales and of creating brand awareness which helps future products of the company to

be readily recognized. Now that I have discussed some of the main considerations regarding the

brand naming associated with a new product, I will explain the importance and usefulness of

Brand Portfolios and the possibility of brand extension, considering the advantages and

disadvantages of Brand extension specifically.

A company that possesses a varied array of products may find suitable to have an array of

different brands that can be readily associated with each specific kind of product offered. The

main goal of a brand portfolio is to maximize the profits of the parent company. In this way is

important that the brand portfolio is diversified enough to reach the widest range of the target

audience, it is also important to avoid overlap of brands within a single portfolio which prevents
competition among the brands owned by the same parent company. A good way to access if the

brand portfolio has an appropriate size is analyzing if the profitability can be increased by adding

or dropping a brand. If it can be increased by dropping, the portfolio is too big, else if it can be

increased by adding, the portfolio is not big enough.

Now talking about brand extension there are some advantages and disadvantages of doing

that. The advantages of branding extension are the immediate recognition that a new product can

gain under the more well-known brand. This association, as mentioned before, saves the

company the trouble of having to spend resources in designing and creating awareness for the

new brand. The brand extension also increases the chance of the new product of succeeding in

the market because of its association with the bigger brand family that is already well-established

with the customers. Not only that the extension of an old brand also makes it easier for the

company to convince retailers that they should stock on their new product because of the

expected success that such a product will have with the final consumers. The other main

advantage is the positive feedback that an extension can create. It can help to reinforce the core

values and identity of a company and gain new loyalty for the brand at large. By providing

something new that can make old customers excited about a different product at the same time

that it may open a whole new niche that the company was not previously targeting with a

specific brand.

As with the advantages, that are really 2 main disadvantages associated with a brand

extension. The first is the possibility of brand dilution, that is the brand becomes uncharacterized

by excessive extensions that cover too many different products under a single identity. That

Make harder for a consumer to readily associate the brand with a specific product that the

company makes which make consumers think about products itself rather than the brand
specifically. For example if a company is well known for making a chocolate and all of a sudden

they expand their brand to include other foods like rice, beans, soups, etc. the consumer stops

associating the brand name with the specific chocolate that the company makes and rather just

thinks of the goods in a generic manner rather than associate a brand with a specific good that

they desire. That is undesirable because the whole point of a brand is to make customers

associate a specific product with our brand, rather than think about some competitor’s brand that

might make a similar product. The second great disadvantage has already been explored earlier.

It is related to the fact that if a specific product under a brand identity fails, the consumers will

now extend that failure to other products associated with this specific brand line.

Conclusion:

As we having seen, there are a lot of considerations that a marketing team has to take in

consideration when they are planning to create or extend a brand identity. Starting with the brand

name and its potential consequences and with the decision to extend or branch out a brand all

these decisions have important impact on a company’s success and should be carefully

considered. This work obviously was still only a superficial consideration of some of the

important things that one might have to think about when branching out or extending a brand

there are many other factors that were not mentioned here. There is also new trends in branding

that have been taking place thanks to the advent of internet and the possibility of directly

interacting with the end users of a product just to mention one the many things that are important

and that were not considered in this work. In the end a company has to make all these

considerations having in mind not only their specific target audience but also the cultural and

market context in which all these decisions are taking place.

Sources:
Kotler, P., & Keller, K. L. (2019). Marketing management, global edition.

Retrieved from https://ebookcentral.proquest.com;